2018 (12) TMI 249 - AT - Service Tax

Benefit of abatement - Mandap Keeper, Beauty Parlor, Internet Cafe, Business Auxiliary Service and Restaurant Service etc. - CENVAT Credit also availed by appellant but later reversed - benefit of abatement denied on the ground that CENVAT Credit availed - Held that - The factual position that the assessee reversed the proportionate credit has not been rebutted by the Revenue by any evidence to the contrary. Legal issue i.e. as to whether such reversal would amount to non-availment of Cenvat credit so as to fulfill the condition of the Notification stand considered by the Tribunal in the case of M/s The Oberoi Rajvilas vs. CCE, Jaipur-I 2018 (5) TMI 1715 - CESTAT NEW DELHI , where it was held that the reversal of credit satisfies the requirement of non availment of credit laid down in the Notification No. 1/2006-ST ibid. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Availment of Cenvat credit and abatement benefit simultaneously.

Analysis:
The appeal before the Appellate Tribunal CESTAT ALLAHABAD stemmed from the Revenue's dissatisfaction with the order issued by the Commissioner, Service Tax, Lucknow. The respondents, engaged in the Hotel Industry, were providing various services like Mandap Keeper, Beauty Parlor, Internet Cafe, Business Auxiliary Service, and Restaurant Service. They were filing common ST-3 returns reflecting the Cenvat credit availed by them. The respondents were also benefiting from abatement for accommodation service and restaurant service as per specific Notifications. However, a scrutiny revealed that they were allegedly availing both Cenvat credit and abatement simultaneously, leading to a show cause notice and subsequent proceedings initiated against them.

The Commissioner, after considering detailed documentary evidence presented by the respondents, concluded that the respondents had not availed Cenvat credit when claiming the benefit of the Notification. He found that either no credit was taken for input services exclusively used for specific services or, in cases of common input credit, the proportionate credit was reversed as per the Cenvat Credit Rules. Consequently, the Commissioner vacated the show cause notice and dropped the proceedings. The Revenue challenged this decision before the Tribunal.

The Tribunal, after hearing both sides and reviewing the grounds of appeal, noted that the Revenue failed to rebut the fact that the respondents had reversed proportionate credit as required. The legal issue revolved around whether such reversal constituted non-availment of Cenvat credit to meet the Notification's condition. The Tribunal referenced a previous case involving a similar issue and held that the proportionate method followed by the respondents for availing credit on common input services satisfied the requirement of non-availment of credit as stipulated in the Notification. Therefore, the Tribunal found no reason to interfere with the Commissioner's order, ultimately rejecting the Revenue's appeal.